The Nigerian currency firmed sharply on the black market on Tuesday, gaining 9.65% to 435 naira against the U.S. dollar, traders said, citing the central bank’s plan to restart forex sales to bureaux de change.
The central bank said in a circular on Thursday that it would commence forex sales to retail currency operators from Aug. 31 and would sell $10,000 twice weekly to each of the 2,991 operators.
The currency, which had weakened to a low of 480 naira on the black market in recent months, firmed from its previous trade of 477 naira on Friday. On Monday, black market traders had refused to show quotes as panic set in following the central bank’s announcement about retail currency operators on Thursday.
On the official market, supported by the central bank, the naira was quoted at 381, where it has been stuck since July. It traded at 386.03 naira against the dollar on the over-the-counter spot market.
Dollar shortages have plagued Nigerian currency markets after the coronavirus pandemic triggered an oil price crash, slashing government revenues, weakening the naira and widening the country’s funding need.
The naira had been hitting new lows on the black market since a 15% devaluation in March, which coincided at a time when the central bank suspended dollar sales to the market due to lockdown to slow the spread of the coronavirus.
With the sharp rise on Tuesday, traders doubt whether the central bank will be able to meet pent up demand on the currency built after it suspended forex sale. Reserves are dwindling and sales to foreign investors are yet to resume.